Income Inequality Is Irrelevant In A Country Like America

“It is in the character of very few men to honor without envy a friend who has prospered.” – Aeschylus

The fundamental issue behind income inequality could be boiled down to a single question: Are poor Americans better or worse off because Bill Gates ($79 billion net worth), Oprah Winfrey ($3 billion net worth), Michael Jordan ($1 billion net worth) and Mark Zuckerberg ($40 billion net worth) are living in the United States?

Certainly, having them living in America creates more income inequality. It also hurts the poor by….oh wait, having them here doesn’t hurt the poor at all. None of these people made their money off the backs of the poor (How could they? The poor don’t have any money) and all of them pay exorbitant taxes because the United States already has the most progressive tax system in the Western world.

So, for example, whatever Bill Gates’ 1/319 millionth share of the cost for our street signs, police, roads, the military, food stamps, Social Security, Obama’s vacations and all the other various and sundry expenses our government racks up may be, he’s paying far more than that. In fact, Gates claims to have paid $6 billion in taxes. Then there are the taxes Microsoft pays (roughly $5 billion per year) and the taxes paid by all the people employed by Microsoft. Speaking of the people employed by Microsoft, the company has over 100,000 employees. That’s a lot of Americans Gates potentially raised up out of poverty. Then when you consider how much everyone from Bill Gates all the way down spends, there are obviously many businesses being kept afloat by Microsoft cash. On top of all that, Bill Gates has given away $28 billion since 2007.

Tell me how some poor family in Chicago or Detroit is being hurt by this in any way? What’s the downside supposed to be of entrepreneurs creating jobs and paying billions in taxes?

Oh, yes, it isn’t that any particular rich person is doing well that’s hurting the poor; it’s that the incomes of the rich are growing faster than the incomes of the poor. Those poor families are staying poor while the top 1% is getting richer. This is what the Left says.

Fortunately, it’s just not true because in America, there is no rigid class system that mires everyone in place economically.

Thomas Sowell: But if you look instead at people and you say what happened to the people who were in the bottom 20% as of 1975 and on into 1991, you find that 95% of the people who were in that bottom quintile in 1975 are no longer there.

John Hawkins: Is that literally 95%?

Thomas Sowell: Yes, literally. That is only 5% remaining – by 1991 only 5% of the people in that bottom quintile were still there. Twenty-nine percent were now in the top quintile.

Incidentally, these numbers are not a surprise because the peak earning bracket for most Americans is between 45-54 years of age. Many of us start out searching through the couch cushions to find change to spend on lunch and end up investing in the stock market. Working your way up the ladder of success is as American as apple pie.

So, if all this is true, then why is the Left so obsessed with income inequality?

Because liberalism works obsessively to get different groups of people to hate each other and then offers to expand the power of government as a fix for the “problem” liberals created. It’s their standard operating procedure.

In this case, liberals are embracing envy, one of the seven deadly sins. Any time someone succeeds at ANYTHING, there will be people who resent it. They’ll feel like they deserved it more, like those who succeeded got lucky or they’ll just want what more successful people have.

Once someone becomes envious, all reason goes out the window. We live in a country where 45% of the people don’t even pay income tax and yet we’re being told that the people who are paying nearly 40% of their income still aren’t paying “their fair share.” We have the highest corporate tax rate in the free world, but we’re told corporations are getting a free ride. If your dream is to “soak the rich,” then congratulations because they’re already getting soaked.

On the other hand, if your goal is to lift the poor out of poverty, you should focus on the growth of the economy, not income inequality. As Henry Hazlitt said,

“The poor are poor not because something is being withheld from them but because, for whatever reason, they are not producing enough.”

The more economic growth there is, the more production there will be and the more people will be lifted out of poverty. That’s why conservatives focus so much on growth-oriented economic policies. On the other hand, focusing on economic inequality makes the government bigger, reduces economic growth and tends to make EVERYBODY poorer. To liberals, this is a feature, not a bug because they need poor people to STAY POOR because if they become more economically successful, they may stop voting for Democrats.

That’s why, to paraphrase Winston Churchill, obsessing over income inequality is a philosophy of failure, the creed of ignorance, the gospel of envy and its inherent virtue is the equal sharing of misery.